Concept explainers
Concept introduction:
Decision making plays an important role in the management. The decisions taken by managers are called managerial decisions. Managerial Decisions are decisions taken by managers for the operations of a firm. These decisions include setting target growth rates, hiring or firing employees, and deciding what products to sell. Manager’s decisions are taken on the basis of quantitative as well as the qualitative measures. The managerial decision includes the decisions like make or buy, accept or reject new offers, sell or further process etc. These decisions are taken on the basis of relevant costs.
Relevant costs are the costs that are relevant for any decision making. Relevant costs are helpful for take managerial decisions like make or buy, accept or reject new offers, sell or further process etc.
Two basic types of the relevant costs are as follows:
- Out-of-pocket costs
- Opportunity costs
To indicate:
The true or false statements.
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MANAGERIAL ACCOUNTING FUND. W/CONNECT
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- Which of the following statements is false? (You may select more than one answer.)a. Under some circumstances, a sunk cost may be a relevant cost.b. Future costs that do not differ between alternatives are irrelevant.c. The same cost may be relevant or irrelevant depending on the decision context.d. Only variable costs are relevant costs. Fixed costs cannot be relevant costs.arrow_forwardWhich of the following statement is correct for relevant costs? a.It is avoidable, future and measured by cash b.It is avoidable, future and measured by profit c.It is unavoidable, future and measured by cash d.It is unavoidable, future and measured by profitarrow_forward______ are the costs associated with not choosing the other alternative. A. Sunk costs B. Opportunity costs C. Differential costs D. Avoidable costsarrow_forward
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